Google has kicked off the inaugural gadget competition for students in East Africa and will announce a winner in August.

In the next four months, Google expects students enrolled at universities in Kenya, Uganda, Tanzania, Ethiopia, Rwanda and Burundi to work on their ideas and submit functioning gadgets on July 14.

A large number of students from the region registered and submitted their gadget ideas by April 4, the deadline for submissions, according to Louise Welch, Google’s project manager for Global University Programs

“We have enjoyed broad participation from students and universities across East Africa. We cannot release exact numbers for confidentiality reasons, but we’ve had robust participation across the board,” Welch said.

While the competition seeks innovative gadgets that can be used globally, it is also encouraging the development of gadgets for local use.

“There is no formula to what makes a good gadget, but there are certainly things to think about when creating one. Does it provide useful and frequently updated information? Or does it provide service that people will need to use frequently? Is it diverting? Fun? Attractive?” Google notes in the advertisement sent to participating universities.

The gadgets will be judged on their functionality, including gadget completeness, cleanly written code and technical sophistication. Ease of use and design scalability of design and originality are also judging criteria.

The categories the devices can win include best education specific gadget, most technically sophisticated gadget and gadget most likely to get international traffic

Students participating in the competition will receive a Gadget Winners Certificate, a Google shirt, pen and notebook. Five students will receive a US$350 stipend and one student will receive a $600 stipend.

Regarding use of language, Welch was noncommittal about whether Google is encouraging development of gadgets that can use local language or whether all gadgets must be in English. Ethiopia’s national language is Amharic and Tanzania uses mainly Kiswahili, which is also widely used in Kenya, Uganda, Rwanda and Burundi.

GENEVA, April 8 (UNHCR) – Representatives of the UN refugee agency and Google on Tuesday unveiled a powerful new online mapping programme that provides an up-close and multifaceted view of some of the world’s major displacement crises and the humanitarian efforts aimed at helping the victims.

The “Google Earth Outreach” programme gives UNHCR and other humanitarian agencies the ability to use Google Earth and Maps to highlight their work on behalf of millions of refugees and other populations of concern in some of the world’s most remote and difficult areas.

“It’s absolutely fantastic. The potential for us and the potential to serve our interests and to serve the refugee interests round the world is quite substantial and we need now only seize the opportunity and move ahead with it,” Deputy High Commissioner for Refugees L. Craig Johnstone told more than 250 staff and invited guests at a launch ceremony in the atrium of UNHCR’s Geneva headquarters. “I think we will all be beneficiaries of it at the end of the day.”

Johnstone said the pilot UNHCR layers, which went live on Google Earth Outreach earlier Tuesday, made it possible for staff and clients to zoom in on specific refugee situations. He said the tool would be particularly useful in extending UNHCR’s outreach and visibility as well as for its own internal administration.

The UNHCR layers, which were compiled by technical and editorial staff within the agency’s communications service, currently focus on three of the refugee agency’s global operations – Chad/Darfur, Colombia and Iraq – but plans are under way to expand.

“In 2008, we are going to spread around the world and try and capture all of the major sites and make sure that they are all available so that people can see what the actual situation is on the ground,” Johnstone said. “It will make it possible to bring that suffering [of refugees in harsh environments] to people, so people can understand where the responsibilities actually are,” he added.

“We’re very excited to participate with UNHCR,” Rebecca Moore, manager and founder of Google Earth Outreach, told the audience, before giving them a demonstration of the tool and showing them some of the new UNHCR layers. “The idea is to take an abstract concept – refugees in some country that people have never visited and may in fact never visit and take them there virtually – so that they can get an intuitive understanding of what the real issues are,” she said.

Google’s outreach programme provides humanitarian agencies with the skills and resources to use Google Earth and Maps to highlight their work to a mass audience. The agencies can overlay text, audio and video information onto Google Earth in the so-called layers, enabling them to explain and illustrate their humanitarian work to a worldwide audience.

Moore said she was “very impressed” by UNHCR’s layers. These show three levels of detail. The first provides an overview of UNHCR itself and takes the user on a journey to Chad/Darfur, Colombia and Iraq operations. The impact on neighbouring countries is also explored, and refugee camp locations are highlighted on the Google Earth maps.

The second layer brings the user even closer to the life of those in exile, exploring such elements as refugee health, education, water and sanitation. Pop-up windows linked to precise geographical points in camps and refugee communities provide written explanations, photos and videos of specific needs and operations. The third level, the “macro-view,” takes the online visitor right down to the local level within a refugee camp, allowing examination of schools, water points and other infrastructure found in a typical site.

UNHCR’s technical experts say that as it grows, the Google Earth programme will allow UNHCR and its humanitarian partners to build and share with each other a visual, geographic record of their joint efforts on the ground to help refugees. This could include, for example, cross-border mapping of population flows as well as the location of displaced people in relation to their places of origin – useful data in logistical planning for eventual repatriation operations.

Also speaking at the Geneva launch was the Afghanistan-born photographer Zalmaï, himself a former refugee. “It’s our duty to give them some hope,” he said, as haunting images from his recent trip to Afghanistan appeared on a big screen behind him.

Google Earth has enjoyed spectacular success since its launch in mid 2005; some 350 million people around the world have downloaded it to date. Moore and other humanitarians in Google developed the idea of the Outreach programme, which has attracted great interest since its launch last year.

longtail eMarketing was able to get Stafford Masie, recently appointed as South Africa’s Country Manager for Google, to come and talk to a select few about new Google eMarketing offerings. The presentation, held at the Johannesburg Stock Exchange, was aimed at educating attendees about the latest trends happening at Google.

Most importantly, we needed to hear – from the horse’s mouth – what Stafford Masie had to say about the latest trends with regards to Google Maps, Google Gadget Ads, Google Mobile Search, YouTube and other Google features that will soon be available in South Africa.

As always it is difficult to make notes of everything being said, so here are the highlights from our notes taken from the presentation.

Stafford started off by giving a little history on Google and said that Google’s aim is to 1.) educate people about everything online and 2.) to assist wherever possible. So, as Google’s Country Manager, Masie and his team of experts want to bring the Global Google solutions to South Africa.

Yes! Google South Africa is involved in trying to improve broadband locally and promise that in 18 months time, South Africa will go from the most expensive (and slow) broadband to the cheapest and fastest broadband connections in the World. According to Masie, this is what he is most passionate and excited about, getting South Africa up to speed with the rest of the world when it comes to broadband connections. That got me excited and pretty much every person in the room, I am convinced about that!

Hopefully low broadband costs will account for up to, and over, 20% penetration of the South African population.

Before I get into more detail about the future local Google services, here are some statistical information that Stafford mentioned regarding Google stats for both South Africa and international:

* 13% of total internet traffic in South Africa during the 4th Quarter of 2007 was spent on YouTube
* A 708% growth was recorded in this quarter
* Gmail is the leading free email service
* 90% of people use Google as their preferred Search Engine

In light of the above, Stafford addressed marketers and digital agencies and mentioned two very important points:

1. End user generated content or end user content generation
* YouTube provides 8000 minutes of video which is published worldwide per minute
* 84% of all internet activity is about people publishing content
* The internet today is not about taking, it is all about giving, sharing and participating
* Everyone is encouraged to experiment and engage!
2. Moment of relevance
* Knowing when someone wants something at the right time and to present them with what they want
* Google is #1 in mobile internet share and “click to sms” to come via ads which will deliver targeted ads when asked for
* Above 60% CTR in online video ads, again with the end user in mind, served at the right time
* Refining Search Engine Result Pages with Google Co-op – giving the user more than what they asked for

Stafford stressed again that online should never be ignored and that both the above mentioned points are crucial for everyone, especially marketers and digital agencies.

Finally, and in very short time, Stafford highlighted the exciting things to come from Google in South Africa and also services that we can make use of:

* Google Maps will be the biggest thing happening in a very short time with the local maps.google.co.za – Exciting developments in Maps such as virtual billboards on street view level and updated map gadgets.
* Mobile search will soon allow click to SMS on inline ads
* As faster and cheaper broadband will be available in South Africa, more people will be online, greater target markets and audiences.
* Google co-op is a new service allowing for refined search within search results
* YouTube channels is a unique way of making use of user generated content when users are provided with a platform or medium
* Syndicated search should be utilized more

Ok, so in a nutshell, that highlights Stafford Masie’s presentation on Google South Africa. Feedback that longtail received from many attendees was that it was informative and eye-opening. People loved Stafford’s enthusiasm and vision to educate and help wherever possible.

Be sure that longtail endeavors to provide further updates to many of the above mentioned solutions and also future events, so keep on “watching this space”.

7 Month old Google Kenya is starting to interact with the local hackers and devs. Just this Tuesday they sponsored the local Tuesday Skunkworks event, giving some of their thoughts on Kenya specifically. My friend, and fellow Kenyan blogger, Bankelele was in attendance and took notes.

Highlights. Google is…

* Mapping Kenya
* Partnering with the largest mobile carrier (Safaricom) and giving free email accounts to all subscribers
* Partnering with universities to make inroads with their web-based office applications and associated services
* Encouraging local content providers to get online (ex: NTVKenya on YouTube)
* Fighting for more bandwidth for all Kenyans
* Working with legislatures to create the right atmosphere to get the right internet infrastructure

Read the rest, and get more detail, on Bankelele’s blog.

It’s interesting to see how Google continues to look at new markets and move ahead in them, without any real profit there yet. Meanwhile, their main competition on the global level on the web (Yahoo!), doesn’t. Interestingly enough, Yahoo has had the mindshare and marketshare in East Africa, but didn’t capitalize on it. They basically left the door open for Google to come in and steal it all away… and they are.

A Skunkworks (blog) meeting yesterday was hosted by (7 month old) Google Kenya, and it was attended by an interesting mix of engineers, webhosts, designers, admins, bloggers and rivals of Google, – who all listened as Google employees explained their aps and maps.

some scribbled notes

– There’s an ongoing Google East Africa competition for students to develop gadgets for Google (closes March 17)
– They are mapping the country with Google map’s – started with Nairobi, Mombasa, Kisumu and Nakuru, with a Kenyan team, doing the mapping work, using the tools. Ideally the next step will be for maps to stream into local yellow pages
– Safaricom have the largest customer base of any kind in Kenya – 8 million strong – and so Google partnered with them to give all their subscribers free e-mail. Many people’s introduction was and still remains, accessing an email account.
– Ushaidi was cited as an examples of enhanced use of a Google platform
– Google in Africa for the long term, with an altruistic motive of sharing local content & information – and currently get less than 1% of revenue from Africa. They helped NTV set up a Youtube platform that has been a big success in terms of Kenyans abroad now able to watch local news online. They monetize in three ways – videoads, adsense, search box advertising. Kenya/Africa needs to get more local content up. Already some local web sites are making good money off adsense that is enough to sustain their online operations.
– Hot point #1 was bandwidth; or the performance of connectivity, service providers and other operators. They are known in the industry for short-changing consumers who are not wary and in the face of a regulator (CCK) who does not seem to care. There was a call for users to take the initiative, to test bandwidth speeds, and identify those with superior speeds and those who were short-changing consumers (a model from Australia called Whirlpool to test broadband was mentioned as a model that could be used to do this)
– Hot point # 2 was the lack of investment in infrastructure/or the wrong kind of investment. Examples: There are 4 ethernet cables in Nairobi, but no cooperation between providers. Government is building data centers, but with no servers there. Local loops are not benefiting end users. It would be nice of government required new building developers to also install connectivity in buildings
– Other challenges with local advertising – does it work? Yahoo never advertised in Kenya; yet have more e-mail accounts through word of mouth. Google is working with universities to give them free e-mail as a way of building a long term relationship. There’s also a move to alert local advertising companies to the presnce of local site to advertise on.

There were many other conversations but they were drowned out by sounds of mouths slurping pizza slices and mshikaki’s.

MONEYWEB: I spent an evening, rather a very interesting…(audio loss) the campus, Dimension Data’s huge office park in the north of Johannesburg, where Google made its first appearance, publicly anyway, in South Africa. It was a fascinating discussion, and we’re going to be taking that through for the next half hour, because it’s not every day that you get the chief information officer or the “head geek” of Google joining us here in this part of the world – indeed, in this continent. But Dr Douglas Merrill is with us now in the studio, as well as the South African manager, the country manager, Stafford Masie. Google, if you don’t know much about it, is quite an incredible company – it was only launched just over a decade ago. There is, well, almost a fantasy-type story that happened, about two guys who went to university together, found a new way of doing things and are changing the world. Douglas, good to have you here in the studio. Google – how many employees do you have today?

DOUGLAS MERRILL: Just north of 16 000 worldwide.

MONEYWEB: And the market cap at the last count?

DOUGLAS MERRILL: Something north of $180bn.

MONEYWEB: The Google Story. David Vice made a lot of money out of this [book] – if you can just pick it up there on camera three? – if you’ve never seen it before, is this prescribed reading to anybody who joins your company?

DOUGLAS MERRILL: We actually spend a great deal of time with new hires – we call ourselves the Googlers – we spend a lot of time teaching people what our culture is about and how do we think about the world, and how did we get where we are, because it’s so important to us. Our culture is our greatest single asset. So, although it isn’t prescribed reading, a lot of people have read it. It’s a great book and there’s a lot of discussion internally of who we are and why we are.

MONEYWEB: The question was because there’s a lot of interesting information in there. Is it true, is it factually accurate?

DOUGLAS MERRILL: I’m sure a lot of it is.

MONEYWEB: All right, let’s move on to something else. On Friday we had the dean of the local business school in here, discussing The Future of Management, a book that Gary Hamel has put together – I’m sure your top team at Google has also had a look at that, because you are one of the three companies that he has analysed.

DOUGLAS MERRILL: Gary Hamel is brilliant.

MONEYWEB: He is, and the stuff in that book, can we believe that as far as Google is concerned?

DOUGLAS MERRILL: It feels pretty right. Google has a pretty interesting management culture. Our belief is that traditional hierarchical organisations are really quite good at doing the same thing multiple times. The problem is and problems many face, and we certainly face at Google, you’re not doing the same thing over and over again, you’re trying to figure out exactly what to do next. So our management style is very, very flat, non-hierarchical, and very communicative. We’re quite chatty, because we’re trying to figure out, “Oh, you solved that problem this way, let’s try it this way”. We also do lots of experiments. So we try lots of things, many of which we expect to fail. At any given moment on Google.com, we have between five and 200 experiments going on, which are things being done slightly differently, most of which will have no effect and will vanish off the face of the earth, some of which might be sort of important and big and actually change the world[?]. That’s our goal. We like to try lots of different things and be very communicative about them.

MONEYWEB: Those “new hires” that you spoke about earlier, do they find it a culture shock?

DOUGLAS MERRILL: Some do. We obviously have a pretty diverse hiring pool. One of Google’s explicit hiring goals is to hire as much diversity as we can – different ethnic backgrounds, different cultural backgrounds – because we want to try and get people with different perspectives internally. When you have people with different perspectives, they will try different things, they will solve problems differently, they’ll argue, and so that all feeds into the innovation engine that drives us. So some of them may come from long careers with traditional companies, and it feels quite different to be at Google. Some might be fresh out of university.

MONEYWEB: Well, it will be interesting to find out Stafford Masie’s story, because he’s a guy from Eldorado Park now running Google in South Africa. It was interesting listening to you this morning, saying a lot of the guys, your peer group, were seeing the big cars in Eldo’s and saying, well, this is perhaps the way to go, to become a gangster – and the only difference was that your father sent you abroad to see a different side of life.

STAFFORD MASIE: Ja, absolutely, and I think if we bring it back to Google, in the context of Google and what Google is, I think Google is that epitome of the online story about, you know, if we can get more and more people to be exposed to more and more people’s opinions, I think your mindset changes. And the only difference between me and the folks back home where I grew up, and what they’re doing today and what I’m doing today, is the fact that I had the opportunity to be exposed. And I think that opportunity every citizen of this country and this continent should have, and I think the Google story plays very, very well into that.

MONEYWEB: Why has it taken Google so long to get really active in South Africa?

STAFFORD MASIE: You know, everyone, when they look at Google – Google is a very young company. If you take a look at where we are today, I think the way they grow is, I think it may be slow from the outside, but it is commitment. I think every time Google takes a step, it takes a deep step. It doesn’t necessarily just take steps. So they took some time hiring the right people in South Africa, and I think they’re very serious about the continent. When I came into the company, one of the things that was pleasing to me was the founder’s view of Africa, and how committed they are about Africa. And they really wanted people in the company that could articulate that and creatively ensure that the Google story in South Africa was an Africanised version of that story. And yes, it did take a while. I think people were anxious to have us. I don’t think we were slow in getting here. And I think the fact that we’re here now, we’ve got good intentions.

MONEYWEB: It’s an interesting point you bring up there about the Google founders being interested in Africa, but there isn’t a whole lot of bandwidth – not enough in South Africa itself, but further in the continent – so how are they going to play a role?

DOUGLAS MERRILL: I think it’s really important to notice that we are a service player and we’re not an infrastructure provider, but we’re obviously very interested not just in South Africa – although we’re speaking about South Africa now because we’re here – but we’re interested in the continent as a whole. So we actually have activities across the continent. We have the government of [indistinct] Rwanda, where we go [indistinct], we have an office in Kenya. Google.org, which is our foundation arm, has launched a series of projects around transparency and infrastructure utilisation across the continent. We were very excited about the recent announcement by Seacom and EASSy[?] around new cables coming down. We think the access to information, access to [indistinct] is the key to long-term social change. We believe that social change arises from sustainable economic change, and sustainable economic change arises from job creation. Job creation is driven by small and medium-size businesses able to try their ideas and try interesting, entrepreneurial things. There are great entrepreneurs in Africa and at the moment many of them are unable to reach the world. We are very excited to see the spread of mobile and wire bandwidth to enable those people to reach the world.

MONEYWEB: It’s so interesting this, many people will say, “Oh it’s a nice PR spin that you’re putting onto it” and even the credo of Google, “Don’t do evil” – Is it true, Stafford?

STAFFORD MASIE: I think it is, I think it absolutely is. If I had to look at how the company deals with its employees, how we deal with ourselves in the local marketplaces we’re around, the instruction that we get in terms of how we should behave in a Google way, we’re not about being aggressive and talking bad and being evil. We’re all about building great technologies and hoping people utilise them, and that’s how we win.

MONEYWEB: And I guess in South Africa – and you made a big thrust about this, this morning, as well – it’s all about mobile.

STAFFORD MASIE: I think it’s both. I think, you know, if you take a look at Africa, there’s a metro story around online and then there’s a rural story. I think the rural aspect of Africa, the mobile device, is an interesting device because most people have mobile phones. I mean, those mobile phones, the capability on them, they’re growing, they’re connected and it’s going to be interesting how that evolves. I think the metro play is where people have PCs and they have mobile phones. But ja, mobile is very, very important in Africa. One of the stats that I mentioned this morning, that I heard, was 78% of most people that have cellphones in Africa don’t have PCs, and above 85% of that 78% will never own a PC in their entire lives. So mobile is important, and extraordinarily important for Africa.

MONEYWEB: But what can Google, which is associated with a PC or a laptop, do for mobile phones? How are you going to be able to read the information that you’re given?

DOUGLASS MERRILL: It’s actually interesting. A large number of searches worldwide actually come from mobile devices today. Mobile is one of our fastest growing areas worldwide. Even in the United States, which has a relatively backward mobile infrastructure, we see a large portion of our queries coming across mobile channels. We have a variety of mobile search efforts worldwide, and a variety of different ways of serving information. Google is not the Internet; we’re the gateway to the Internet. So sometimes you can do a search on your mobile phone and get data back which isn’t ideally representable on mobile phones. But one of the really exciting trends in mobile is the increasing use of full-featured Internet browsers on the phone – and you see this in a variety of smart phones worldwide – which are (audio loss), etc. The hardest part about it, and the most exciting about searching on a mobile phone, is it isn’t the same as searching on a PC. On a PC you’re happy to sit there and type, no problem. On a mobile phone, keying in a word using, for example, [indistinct], is quite difficult, so you have an interesting UI challenge. What you might be able to do is pick up the phone and say, “What’s the address of CNBC Africa?” and get an answer back, and maybe even you get an answer back that includes directions – your interaction style with your mobile phone is quite different, and we’re actually trying many dozens of things worldwide in this space.

MONEYWEB: The other thing about the Internet is, it is the great disintermediator. Once you can perhaps get a transaction engine onto your mobile phone, wouldn’t that be unlocking a key to a whole new world?

DOUGLAS MERRILL: It could be. You know, the story of the Internet is a story of allowing people to quickly reach information and contribute to it, and we’ve seen disintermediation. We’ve also seen some re-intermediation, where you see different kinds of players helping people perform services or provide value-add services on top of search and interesting things like that. But fundamentally we believe all the world’s information should be universally accessible and useful. And oftentimes what you want to do is do a business transaction – I want to buy a ticket, I want to buy that book. Doing that quickly and easily is obviously a really key…

MONEYWEB: Douglas, I know you travel a lot around the world, but when you have a look at Africa as a continent, is there an opportunity here to leapfrog? The technology is so far behind.

DOUGLAS MERRILL: I think all that sort of incremental growth strategy which in technology would be, you know, laying wire, or doing lots of things which actually don’t make a lot of sense for an environment which has wealthy high urban concentration, but then a large percentage of rural. You are going to build a technology infrastructure in that world which is a pretty [indistinct] power creation, which is pretty mobile in nature, and which is pretty peer to peer, and you’re going to try to get people to talk to each other and then use that to hop back to Europe or back to data in America, you know. But that’s a wholly different technology infrastructure than, for example, we built in the United States. So I actually think you’re going to see fascinating technology be developed here, and perhaps in a year, two years, five years, ten years, we’ll be talking about how Africa is in the lead in some interesting ways because they wouldn’t have been hamstrung by that which we learnt before.

MONEYWEB: Douglas Merrill is the chief information officer at Google in the United States, and we’re also talking with Stafford Masie who is the South African manager. We’ll be back in just a moment, stay with us.

…

Welcome back. We are talking with the Google guys. Well, our “guys”, anyway. Stafford Masie is the South African manager. With him in the studio is Dr Douglas Merrill, who is the chief information officer at Google. Stafford, you said in the presentation this morning that the time has come for South Africa, that you could not have been launching Google into the South African market at a more appropriate time. How so?

STAFFORD MASIE: I think on many fronts. I think we’ve seen a big change in terms of what technology actually means to GDP. I think government understands that the margins are extremely important. I think we’ve got terminology like the digital divide that’s been spoken about in parliament, and http://loss we have great examples worldwide about people that have been connected and have utilised technology and have great success. I think of people like Mark Shuttleworth. You know, there was a South African flying our flag in zero gravity – and what was the basis of that success? Well, he had computing power and he was online and built something extraordinarily well.

MONEYWEB: And he sold in February 2000 at the top of the Nasdaq.

STAFFORD MASIE: Correct. So we want to see more of that, and I think it is very topical today. And I think that the skills pool in Africa – we have so many people walking around with awesome ideas, with great ideas, and I think if we can simply connect those human beings and have them have the capability to express themselves to the entire world, you know, I don’t see why we can’t have a Skype in South Africa. [Overtalking] I don’t see why Facebook couldn’t have started here. I don’t see why Google couldn’t have started here.

MONEYWEB: We don’t have the bandwidth.

STAFFORD MASIE: Today – and I think that’s changing. I think Google’s role in the country is to personify that and say, here are case studies, here are examples of people that have gone online, that have leveraged the opportunity, and they are making a living of being online in South Africa. And I think if we proliferated that across the country, we could have mass upliftment. I think the transformation story, I think about where we http://loss technology plays a very big role in that part.

MONEYWEB: You going to change the advertising model, to many degrees. Again in Davos last month they were talking a lot about changing analogue dollars into digital pennies. In other words, for the advertiser it is a whole lot cheaper to reach your new market, and Google has brought a lot of this on. But isn’t there a downside to that?

STAFFORD MASIE: I don’t think so. I think we have seen innovation in the advertising space. I don’t think we’ve per se changed it. I think the way people are doing research, they are going online, they are spending more time online finding out where they want to go in the world. They are spending more time on “should I purchase this vehicle?” They are spending more time online creating content about different things. So advertisers – we provide them a platform that is very targeted in terms of spend. We’ve got great metrics for showing you where every single rand of your spend went, and we’re here in South Africa to prompt advertisers to spend more online. And I think the value propositions we are trying to display – I don’t think it’s a big change, I think it’s a supplementary aspect of the portfolio of advertising. I think you’ve still got digital, you’ve still got print, you’ve still got television…

MONEYWEB: Where does all Google’s advertising worldwide come from, then? Surely from the existing advertising cake?

DOUGLAS MERRILL: It’s actually quite complicated to answer that questions. Right before I came here I was speaking to one of the world’s largest advertising agencies, and one of the things that they have told us is actually that they are better able to get advertising into the pipeline because using http://loss just online. We also provide radio advertisements, television advertisements, print – we have several different. As Stafford mentioned, you can measure your efficacy. One of the great problems of advertising historically has been that you don’t actually know what happens as a result of that ad. In all of our technologies you know what happens as a result of doing ads. It changes advertising from an undirected cost, to a cost of sale. At that moment you know not just that I have just spent some money, but I spent some money to get that amount of revenue, which is a completely different way of thinking about advertising.

MONEYWEB: Absolutely, and far less wastage, as well. Again at Davos they were talking about 80% of advertising being wasted at the moment, whereas in the Google way, of course, 0%.

STAFFORD MASIE: And here in South Africa on the ground we have seen that. As we engage with clients, they may be spending X per quarter online. Once we demonstrate and educate and show them what Google’s capabilities are to empower their businesses online and to do more, we see that spend trend differ completely. But we see it as supplementing, we don’t see it as, “OK, we are going to take from this and give it to this”. We are actually seeing advertising budgets increasing because the portfolio extends, and we’ve got great capabilities in our portfolio.

MONEYWEB: Maybe we can address this in a different way. What has happened in this and other parts of the world? Google is in 60 countries now, where you have entered the marketplace in the same way as you are with Stafford here in South Africa?

DOUGLAS MERRILL: I think it’s very important to notice, if you think about Google’s business model, most of our advertising is online. Not all of it, most of it is. And that online advertising is what’s called pay-per-click, and the advertiser doesn’t [?indistinct] pay me something to display his or her ad. The advertiser pays Google if, and only if, a reader, a searcher, a user finds it useful enough to click on it. So that means that it’s a lead, a valid lead. It not simply, in other words, you are paying me for nothing. And furthermore it means that the advertiser is only getting really interesting, useful qualified leads. So instead of Google stepping in and taking money out and simply sucking money like some giant vacuum cleaner from the local market, we only win to the extent that money flows in to these local businesses, these local advertisers. So what we find is that our reaching in to new markets increases our advertising share, increases the return on investment advertising; it can change it from pure advertising to a cost of sales, and tends to help grow economic development. Our perspective, again, is that sustainable social change comes from economic change. So for us to be able to bring money into the environment creates the opportunity for sustainable social change.

MONEYWEB: More efficient allocation of capital.

DOUGLAS MERRILL: More efficient allocation of capital.

MONEYWEB: But it does change the cake. If I am a business and it’s cost me $100 to get a lead through a traditional source, an analogue source, and it’s going to cost me one $1 to get a lead through a Google source, well, it’s not going to take me too long to work out that that $100 should be better spent over here. What is your natural percentage of the market, though? Or what would Google, or maybe, say, online advertising’s natural share of the market be?

DOUGLAS MERRILL: It’s hard to argue with that natural share. I mean, the market hasn’t existed long enough. There are three major online advertising players…http://loss last year out of a global advertising market, a market of more than three trillion. There’s clearly quite a bit of non-online spend still in the world. Advertising agencies in the United States have asserted that we are many times, sort of [indistinct] more effective than the next best form. But advertising that is online, click-to-pay advertising versus offline, largely it’s the wastage issue you brought up already. It’s hard to argue that $16bn out of $3 trillion is the right level. I don’t have a crystal ball, I can’t see the future, but one can only imagine that advertisers are rational beings and the natural rate will flow based on that return on investment.

MONEYWEB: And in South Africa it’s very small at the moment, so you have a lot of upside?

STAFFORD MASIE: Yes, I think there is a lot of upside, absolutely, and I do think that online from an international inventory perspective is extraordinarily important to South Africa. We’ve got a large export market and we’ve got a large travel and tourism market. Those markets want to get to people outside of South Africa, and online presents a different opportunity. Some have leveraged the opportunity, but not truly and not to the full extent that they could. And we want to teach folks, hey, you know what, you can get to everyone. If you want to know, as a bed-and-breakfast, that the Germans are going to travel more or less this time, we’ve got that insight. Or if you want to know when the UK markets is probably going to want to do a safari, we can give you some insight into that. So I don’t see it as eroding. I see it as supplementing, and we are seeing it appending. So more and more people are putting more money into advertising, and they are doing it online because we have this international focus here.

MONEYWEB: The point that I did bring up with Douglas a bit earlier, about transaction – in South Africa, with exchange control it’s a huge blockage here. You can’t go onto Apple iTunes for instance. PayPal, invented by a South African, can’t even be used in this country. Is that not going to put a little blockage in the way that you are looking for more transaction-based revenue?

STAFFORD MASIE: I don’t think so. I think we have had some limitations. Absolutely. But things will change. As more and more people come online, there are different methods to transact. I think you have mentioned a couple. We have seen some innovative ways that people are transacting locally, and it’s not just about international people transacting into South Africa, but it’s also inter-sub-Saharan connectivity and people trading from…

MONEYWEB: But take that German who wants to book at a bed-and-breakfast in South Africa – how is he going to do it right now?

STAFFORD MASIE: Well, we’ve got lots of relationships. You can do it through some our [indistinct] relationships…

MONEYWEB: But he can do it directly – there’s no problem with that. But a South African who wants to book in the United States might have a difficulty because of exchange control.

DOUGLAS MERRILL: There are many countries in the world which have pretty rigid exchange-control models, and South Africa is obviously one of them, but there are some others. And there are a variety of business models that have emerged to address that problem worldwide. To your earlier point, international currency flow is a pretty clean, natural market, and there will be ways to transact across exchange-control barriers.

MONEYWEB: Well, it’s been fascinating looking at the intimacy of it. Douglas, I can’t let you go, though, without picking up on the Google IPO. You are the man behind the thought process and one would wonder – it was so successful, why haven’t you used the algorisms that you brought in for Google for maybe other IPOs?

DOUGLAS MERRILL: There were a group of us who recorded the idea, and I was, you know, fortunate enough to be one of those people. The actual core idea was from Sergey [Brin], who recognised our advertising market. Our advertisers bid to get an ad. They don’t say, you know I will pay $5 – it’s not a preset price list. They bid, and then the person who bids the most, in conjunction http://loss position. And his perspective was, why shouldn’t we do exactly the same thing for our national listing. So, we figured out the mathematics of an auction that would make sense. We built a set of systems to do it, and we [indistinct] ourselves as pretty successful. We got a good price for our company. We got a lot of individuals into the market who might not have been otherwise. We didn’t have super large blocks going in the traditional way allocations are done. But we didn’t view our success http://loss public only through an auction. Our success was we weren’t people that talk about the allocations of IPOs, and who gets initial grants. And we feel our conversation started and still goes to this day. We actually feel we were quite successful.

MONEYWEB: Is there an application a little bit further – you have exchanges, stock exchanges, foreign exchanges – that you can take that technology and perhaps implement it there as well in time to come?

DOUGLAS MERRILL: Who knows what we will do in the future, but obviously you do see pretty rich auction behaviours in exchange futures. You do see pretty rich auction behaviours in certain kinds of exchange-traded funds. The computational hedge fund model is effectively a back-end auction. And you see the same technology, whether it be us or others. The legend of…

MONEYWEB: Are you looking at it, though?

DOUGLAS MERRILL: Look, we look at lots of things. I have not idea what we are looking at. You know, I learn something new every day. But there are lots of brilliant people http://loss the notion of applying mathematics and computers science to problems that were traditionally solved, perhaps, by a group of people in a closed room smoking cigars. The more that you can render that explosive and make it mathematical and fair, there’s a social good…

MONEYWEB: I heard Bill Gates say three years ago that he regarded Google as the Number 1 competitor, which was a surprise to many people at the time. Now it’s quite clear that there is no question that Microsoft is very worried about you. Is it the same in the Google place. Do you worry as well about big Microsoft?

DOUGLAS MERRILL: I can’t tell you what a compliment it is for a Bill Gates to talk about this little company of ours as the Number 1 competitor. He’s an amazingly brilliant man. He and his team of engineers have been around, you know, they have been a profitable company for over 20 years. They make more than a billion dollars in profit every month http://loss for them to compliment us by saying we’re the Number 1 competitor – what a compliment! We are core believers that you don’t drag your business [indistinct]. We focus on our users – and what our users want us to do, we try to do, because our users are always one click away from leaving us. We figure as long as we do what our users want and we do it well, and we keep our social [indistinct] off, we keep not going evil, we will be successful.

MONEYWEB: Dr Douglas Merrill, who is the chief information officer at Google in the United States – and we also spoke to Stafford Masie. Hope you enjoyed that. That’s all from Power Lunch, which is brought to you in association with Moneyweb.

Google is expanding its presence in Africa, in what locals are suggesting is part of a move by Google to “realign” its growth strategy part in response to Microsoft’s takeover offer for Yahoo.

Google is currently advertising or has employed staff in Ghana, Tanzania, Uganda, Rwanda, Nigeria and Senegal, and is expanding its Africa head office in Kenya.

AllAfrica reports that Google’s Nairobi (Kenya) office is searching for five senior executives for its African operations, “laying the foundation for a looming market share battle on the continent.”

Online connectivity in Africa is below 5% of the population, which isn’t completely surprising given large parts of the content still lack basics such as water, food and electricity. However the more stable African nations have started to boom, and Africa remains the final frontier for internet growth. Africa offers strong growth opportunities into the future when eventually much of the growth in Asia and South America will start to slow.

COMMENT

[Africa] is the only remaining unindustrialized continent, and it’s jumping straight into the information era, the largest population to do so without industrialization. Any company that has vision will “realign” itself.

Hash – Google started making these moves long before there was any talk of a MS/Yahoo deal. They’ve been slowly ramping up in East/West Africa for the last year and South Africa for 2 years. If you’re thinking that Google is moving faster into Africa just for what your concept of the internet is, you’re wrong there too. It’s about mobile phones and the long tail of the African market. There are more than 200 million mobile phones in Africa that few companies are paying any attention to. It’s Africa’s PC. Yes, there is a market within urban areas for traditional web-based Google products, but this isn’t the main market in Africa. Your comment that, “Africa remains the final frontier for internet growth” is true though. People are going to make millions of dollars there very soon, and the rest of the world will be surprised because they didn’t see it coming.